Smart Digital Group Limited (SDM) Securities Class Action Lawsuit Filed [January 19, 2026]

Introduction to Smart Digital Group Limited (SDM) Securities Class Action Lawsuit

A securities fraud class action has been filed against Smart Digital Group Limited (NASDAQ: SDM) in the U.S. District Court for the Southern District of New York, alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5. The complaint covers investors who bought SDM securities, traded on the NASDAQ Stock Market, from May 5, 2025 through September 26, 2025, at 9:34 AM EST. 

Investors allege the company misled the market about its business, operations, and the true nature of trading in its stock, while omitting the realized risk of manipulation, including a social media-based promotion campaign and a potential trading suspension. The truth began to surface when NASDAQ halted trading for volatility on September 26, 2025 and the Securities and Exchange Commission (“SEC”) suspended trading pursuant to a trading suspension order from September 29 through October 10, 2025 due to suspected social media-driven activity and market manipulation. As a result, SDM's stock collapsed 86.4% in a single day, causing severe harm to investors and significant shareholder losses.

Smart Digital Group Limited (SDM) Securities Lawsuit Case Details

Case Name: Dixit v. Smart Digital Group Limited et al.
Case No.: 1:26-cv-00296
Jurisdiction: U.S. District Court, Southern District of New York
Filed on: January 13, 2026

Smart Digital Group Limited (SDM) Company Profile

Smart Digital Group Limited, a digital marketing services provider, operates through entities in Singapore, Macau, and Mainland China, reflecting cross-border operations, offering event planning and execution, internet media services, software customization and marketing, and business planning and consulting. The company reported revenue of $21,519,072 for fiscal year 2024 and $9,702,145 for fiscal year 2023, with internet media services and consulting services accounting for the majority of 2024 revenue in the internet media and consulting services industry.

Smart Digital Group Limited (SDM) Securities Lawsuit Class Period

May 5, 2025 – September 26, 2025 at 9:34 AM EST, inclusive. 

Persons and entities that purchased or otherwise acquired SDM securities on the NASDAQ Stock Market between May 5, 2025 and September 26, 2025, at 9:34 AM EST may be eligible to join the Smart Digital Group Limited (SDM) class action lawsuit.

Allegations in the Smart Digital Group Limited (SDM) Securities Class Action Lawsuit

The lawsuit names Smart Digital Group Limited, Chief Executive Officer Yunting Chen, Chief Financial Officer Qiongshan Huang, Chairman Sam Wai Hong, auditor Enrome LLP, and underwriter US Tiger Securities, Inc. as defendants for alleged violations of the federal securities laws. According to investors, defendants made materially false and/or misleading statements and failed to disclose material adverse facts about the company's business and the trading activity in its stock, as public statements lacked a reasonable basis and omitted material risks. 

The narrative begins before the class period when, on May 1, 2025, the company's IPO Prospectus highlighted sharp revenue growth-$21.5 million for fiscal 2024 and $9.7 million for fiscal 2023-describing a roughly 121.8% increase. As the class period progressed, the company disclosed a cryptocurrency-related plan. 

On September 23, 2025, it announced plans to establish a diversified cryptocurrency asset pool focused on Bitcoin and Ethereum. Two days later, on September 26, 2025, the company reiterated the plan, emphasizing stability, transparency, and alignment with long-term goals. Meanwhile, investors allege the company's public statements and risk disclosures omitted any mention of realized fraudulent trading or market manipulation used to drive SDM's stock price, including social media misinformation. 

The complaint asserts SDM was the subject of a social-media promotion scheme featuring misinformation and impersonators posing as financial professionals, a market manipulation scheme designed to artificially inflate price and artificially inflate trading volume, while insiders and/or affiliates used or intended to use accounts, including offshore accounts and nominee accounts to facilitate sales through coordinated share dumping and coordinated sales during a price inflation campaign. As a result, SDM securities were at unique risk of a sustained trading suspension by the SEC and NASDAQ and a NASDAQ volatility trading halt, rendering defendants' positive statements misleading and lacking a reasonable basis, in violation of Rule 10b-5 and Sections 10(b) and 20(a) of the Securities Exchange Act.

The Truth Emerges

On September 26, 2025, following reports that the SEC was reviewing trading activity in SDM’s securities, the Company’s stock experienced significant volatility. Trading in SDM shares was halted shortly after the market opened and later resumed, ultimately closing at $1.85 per share, down approximately 86.4% on the day. Measured against SDM’s prior closing price of $13.61, SDM’s stock lost approximately 88% of its value on September 26, 2025. Later that day, the SEC issued an order suspending trading in SDM securities from September 29, 2025 through October 10, 2025, citing concerns regarding potential market manipulation driven by recommendations from unknown persons on social media, including an unprecedented spike of approximately 270,000 orders placed within a single minute, which appeared intended to artificially inflate SDM’s stock price and trading volume. 

As these measures took hold, reflecting dual regulatory intervention by the SEC and NASDAQ, the company went on the defensive. On October 8, 2025, SDM filed a Form 6-K, a public filing with the Securities and Exchange Commission stating it had not participated in any price manipulation and would fully cooperate with the SEC and Nasdaq. On October 24, 2025, the company disclosed the resignation of its Chief Financial Officer, effective October 20, 2025. These events contradicted prior omissions about manipulation risks, including the unique risk of sustained suspension and undercut the company's earlier positive messaging about its business and prospects.

Market Reaction

The stock's path during the class period was notable, reflecting extreme stock price volatility. On June 20, 2025, within days of a Form S-8 filing and without other announcements, SDM closed at $8.70, up 25.7% from $6.92, on a 56-fold increase to 464,900 shares, a concentrated trading volume spike. Momentum carried into late July, reaching an intraday high of $29.40 on July 28, 2025 with 918,000 shares traded, and a class-period high closing price of $26.00 on July 30, 2025, followed by continued volatility. 

Then, based on no company news, the stock cratered to $10.17 by August 8, 2025 over the following week. The run-up resumed in September as SDM filed a Form 6-K with financial results on September 22, 2025, closing at $14.85 versus $13.81 the prior session; the next two days, after the company touted a cryptocurrency asset pool plan, shares rose to $15.61 and then $16.01, before extreme trading volatility returned. 

On September 26, 2025-after a pre-market press release repeating the crypto plan-NASDAQ halted trading for volatility and the stock collapsed 88% to $1.85 from a prior close of $13.61, on a record 25.9 million shares, amid market manipulation concerns and a trading suspension that followed.

Next Steps

• Submissions for lead plaintiff are due: March 16, 2026.

• The Court will issue its order for lead plaintiff and counsel in the weeks after submissions are due.

• The Court will then consider motion for class certification.

• The Court will later consider a Motion to Dismiss.

To learn if you are eligible for recovery under the SDM securities class action lawsuit, visit the case submission page here.

Disclaimer: This shareholder alert is for informational purposes only and does not constitute legal advice. Consult a qualified attorney for personalized guidance. No specific outcomes are guaranteed.